“Mechel” has agreed about conditions of debt restructuring with creditors

That “Mechel” has reached agreements on debt restructuring with all creditors, stated in his address to shareholders main owner and Chairman of the Board of Directors of the company Igor Zyuzin (owns 67,42%), which on Thursday night sent out a press-service of Mechel. Under the agreement, the start date of repayment is postponed to 2017, and for the most part loans it can be postponed to 2020, the report said. In the spring of 2014 when the company began talks with creditors, the total debt of “Mechel” was more than $9 billion In the first nine months of 2015, it had fallen to $6,45 billion.

The restructured debt will be $5.1 billion (80% of the total debt). The debt to major creditors of the company — Sberbank ($1,267 billion), Gazprombank ($1,793 billion), VTB ($1.07 billion) and a syndicate of international banks ($1,004 billion), follows from company presentation. The remaining debts ($1.3 billion) is “small creditors” (EDB, Raiffeisenbank, URALSIB and others), credit export agencies and Russian bonds, said the representative of “Mechel”. Some of those creditors of the company have already agreed on the restructuring, with the rest of the negotiations, he said.

According to the presentation of “Mechel”, the debt owed to major creditors of the company to repay until the end of 2018. If you have already been late payments of $1,314 billion, and for 2016 had to pay $3,466 billion On restructuring the maturity of the debt extended to 2022: in 2016 the company should pay only $551 million (first quarter $476 million), while the rest is evenly stretched to six years, according to the presentation of “Mechel”.

All debt owed to Gazprombank and VTB, which “Mechel” managed to agree on the basic conditions of restrukturizacii last year, to be converted into rubles. In the end, the ruble-denominated share of debt will grow from 35 to 60%. Interest rates are tied to LIBOR and key Central Bank rate is MosPrime rates volatile. Due to partial capitalization of interest ruble interest payments will be paid based on the rate of 8.75% per annum instead of current of 12.5–14.5%. Banks agree to write off a large portion of assessed fines and penalties, according to the presentation.

With Sberbank, the last major creditor that did not agree to go to “Mechel” on the assignment previously agreed upon fixed payments in 2016 and 2017 ($551 million and $106 million respectively instead of more than $1 billion over two years). According to a source involved in the negotiations on restructuring $500 million of debt to Sberbank in 2016 Mechel plans to repay by selling assets, in particular shares “Elgauglja” developing the Elga coal Deposit. When the conditions of the grace period of repayment of the debt shall be four years. On ruble loans will be the key rate of the Central Bank plus 1.5% (but not less than 8.75 per cent), for U.S. dollar three — month LIBOR plus 7%.

Collateral for the loans from these three banks includes real estate and equipment, shares in principal subsidiaries and their sureties. Details of the representative of “Mechel” did not disclose. The main shareholder Igor Zyuzin will not pledge their shares and the guarantee, said a source close to “to a Mechel”.

“As we previously reported, we are working closely with “a Mechel” in the framework of signed agreements on debt restructuring of the company. At the moment work is continuing on the final performance of all the terms of the restructuring,” — said in the evening on Thursday the official representative of the VTB. The representatives of Gazprombank and Sberbank declined to comment.

The completion of the restructuring will require the approval of certain transactions at the extraordinary shareholders ‘ meeting, said Mechel. Under current law, such transaction may be approved only if they receive more than half of the minority shareholders or owners 16,29% of the securities of “Mechel”. This issue will be considered at the extraordinary meeting of shareholders of the company on 4 March. If the transaction will not be approved properly, not just some of the terms of the restructuring may not take effect, it could negatively affect the process of restructuring overall, warned the shareholders of the company.

The leader of the society of the Russian minority shareholders of “Mechel” (represents the owners of about 2.5% of the company’s securities) Elvis Mharlamov said that he supported the terms of the restructuring and the situation of minority shareholders is beneficial to collect the package.